Search EconLog

Taxing OPEC

Home
| EconLog
| Archives
| Permanent Link and Comments

Andrew Samwick points to a paper by Jayanta Sen that suggests that it is in the interest of oil consuming nations to tax oil. Sen writes,

a tax on crude would transfer wealth of $100+ billion a year from foreign governments to the US consumers, thus providing a major economic stimulus to the economy while at the same time reducing consumption of gas...For a range of demand and supply elasticities that I study, the wealth transfer savings for the United States (which has about one-third of global oil imports) should be in the range of $108 to $152 billion a year.

At the Saffran Conference, Jeff Frankel rattled off seven advantages of a tax on oil--I don't remember all of them, but they are bound to include reducing pollution, reducing trade imbalances, encouraging search for alternative energy, and more.

But that is an example of a policy advocated by economists that is a political non-starter.

Comments and Sharing

CATEGORIES: Energy, Environment, Resources

TRACKBACKS (3 to date)

TrackBack URL: http://econlog.econlib.org/mt/mt-tb.cgi/394

The author at Tim Worstall in a related article titled Solving the Oil Problem. writes:

Wanna know how to solve the oil problem?Tax it. But then, as the man says: But that is an example of a policy advocated by economists that is a political non-starter. I’d just add that it’s a blindingly obvious and [Tracked on November 8, 2005 8:35 AM]

COMMENTS (2 to date)

Latest Comment

dearieme writes:

Would it be a non-starter if the trade-off was a cut in worker payments into the Social Security system? How would the arithmetic look: how big a tax on oil or gas would be needed to exempt every American from paying into Social Security? Could you even call the tax a "Social Security tax"?

Posted November 7, 2005 6:23 PM

Mark T writes:

Far better, introduce an import tax so that it never falls below $60. This provides a minimum for consumers - encouraging efficiency etc, but also a minimum for producers, encouraging alternative energy, development of oil tar and shale (significant geo-political benefit) and takes government out of the redistribution issues. Setting it at curret levels would be politically acceptable sice it is taking away a possible windfall, not increasing hurt from here. Windfall profits to oil companies could be recovered through corp tax offsettable for expenditure on refineries and oil tar etc

Posted November 8, 2005 8:57 AM

Comments for this entry have been closed

Read comments

Return to top

Blogging software: Powered by Movable Type 4.2.1.
Pictures courtesy of the authors.
All opinions expressed on EconLog reflect those of the author or individual commenters, and do not necessarily represent the views or positions of the Library of Economics and Liberty (Econlib) website or its owner, Liberty Fund, Inc.

The cuneiform inscription in the Liberty Fund logo is the earliest-known written appearance of the word "freedom" (amagi), or "liberty." It is taken from a clay document written about 2300 B.C. in the Sumerian city-state of Lagash.

Contact Site Map Privacy and Legal http://www.econlib.org